Monday, September 21, 2009

Greg Mankiw Applies for a Position on the Death Panel

That's the only way I can read his latest NYT piece.

Mankiw writes of his own situation where he takes a daily statin pill to lower his cholesterol. He then tells us that estimates put the annual cost of this pill at roughly $150,000. Then he poses this question:

Imagine that someone invented a pill even better than the one I take. Let’s call it the Dorian Gray pill, after the Oscar Wilde character. Every day that you take the Dorian Gray, you will not die, get sick, or even age. Absolutely guaranteed. The catch? A year’s supply costs $150,000.

Anyone who is able to afford this new treatment can live forever. Certainly, Bill Gates can afford it. Most likely, thousands of upper-income Americans would gladly shell out $150,000 a year for immortality.

Most Americans, however, would not be so lucky. Because the price of these new pills well exceeds average income, it would be impossible to provide them for everyone, even if all the economy’s resources were devoted to producing Dorian Gray tablets.

So here is the hard question: How should we, as a society, decide who gets the benefits of this medical breakthrough? Are we going to be health care egalitarians and try to prohibit Bill Gates from using his wealth to outlive Joe Sixpack? Or are we going to learn to live (and die) with vast differences in health outcomes? Is there a middle way?...Inequality in economic resources is a natural but not altogether attractive feature of a free society. As health care becomes an ever larger share of the economy, we will have no choice but to struggle with the questions of how far we should allow such inequality to extend and what restrictions on our liberty we should endure in the name of fairness.

In the end of our day of philosophizing, however, we face a practical decision:

Who gets the magic pills, and who pays for them?
I find the way Mankiw poses this question absolutely stunning. He frames it in a way that ignores the fact that almost all inventions are generally very expensive at first and that the rich are the only ones that can afford them.

He frames his question as though his new magic pill will always be expensive. He ignores what happens to products overtime, that the price drops and the quality improves, which make them available to more and more people. I site personal computers, calculators, cell phones. etc. The list is, indeed, endless.

To frame his question the way he does completely eliminates the free market option and the general tendency overtime to better quality and lower prices in products. Instead, deciders have to come in determine how much money is spent for given treatments, whose money it is, and who is to get the treatments (All the while eliminating the incentive for better products and lower prices--because it is no longer the consumers health care providers have to attract but the power hungry deciders.

I knew Mankiw was always off on his economics, but I never realized his power hungry tendencies, until now. I'll be damned the day my healthcare depends on an equation that Mankiw designs.


  1. It is amazing and sad that his books are what are being used to teach economics students in colleges today.

  2. The answer to the question is right in the question itself. The people who get the pills are the people who can afford it. There is no social issue to be resolved no challenging questions that need answers. YOU get what YOU pay for, its that simple. Or it should be anyway.